London: Pace, the world's largest set-top box maker, has agreed to buy US broadband technology firm 2Wire for $475 million (Dh1,744 billion) to broaden its customer base beyond cable and satellite into the internet TV market.
The British firm, which overtook Motorola to claim the top spot in May, said 2Wire supplied AT&T and the deal would catapult it to number three in the global home-hub market.
Analysts at J.P.Morgan Cazenove said they saw the deal adding 12 per cent to forecast earnings in 2011 and 18 per cent in 2012. The company's first-half results, which beat Caz-enove's forecasts, alone justified a re-rating of the shares, they added.
"The acquisition of 2wire is important for two reasons in our view: first it allows Pace to enter a new market and supply US telcos, and second it adds further software and gateway expertise to further strengthen the company's leading position in converged devices," they said.
Pace Chief Executive Neil Gaydon said: "We have built a strong position in the US with cable and satellite operators and 2Wire, with its expertise in the broadband residential gateway market, will enable us to address a full range of US operator requirements."
Investors welcomed the move by the Yorkshire, northern England-based company, marking the company's shares up as much as 8 per cent to a near-five month high.
Before the deal, Pace's internet TV business was dwarfed by its cable and satellite operations, where it makes set-top boxes for Canal+ and Comcast.
Gaydon said broadband delivery would become more popular in high-spending, competitive markets like the United States.
